Neogen Stock Climbs on Strong Q2 Earnings and Raised Forecast
The food and animal safety specialist surpassed profit estimates by a wide margin, signaling a potential turnaround after its landmark 3M business integration.
Shares of Neogen Corporation (NASDAQ: NEOG) rose in trading after the company posted second-quarter financial results that significantly outpaced analyst expectations and raised its full-year financial outlook, buoying investor confidence in its ongoing strategic turnaround.
The Lansing, Michigan-based company, which specializes in food and animal safety solutions, announced quarterly revenue of $224.7 million, comfortably beating the consensus estimate of approximately $208 million. The performance on profitability was even more striking, with earnings per share (EPS) reported at $0.10. This result dramatically exceeded Wall Street’s forecast of $0.03 per share, according to data from StreetInsider.
Following the strong quarterly performance, Neogen lifted its guidance for the 2026 fiscal year. The company now projects revenue in the range of $845 million to $855 million, an increase from the consensus estimate of around $825 million. It also guided for an adjusted EBITDA of approximately $175 million for the year.
The positive results mark a significant step forward for Neogen as it continues to digest its transformational 2022 merger with 3M’s food safety division. The integration process had previously presented hurdles, with management noting "execution challenges" in the first quarter of the fiscal year that had hampered performance. This quarter's strong showing, which included core revenue growth of 2.9%, suggests that efforts to streamline operations and improve synergies are beginning to bear fruit.
The integration remains a central focus for the company and investors. Management has previously communicated a strategy focused on driving margin improvements through automation and operational efficiencies as the combined business stabilizes. The second-quarter beat provides tangible evidence that this strategy is gaining traction, potentially assuaging concerns that followed the complex, multi-billion dollar transaction.
Prior to the earnings announcement, analysts held a cautious "Hold" consensus on the stock, with an average price target of $8.17. The significant profit beat and upwardly revised forecast may prompt analysts to re-evaluate their positions on the company, which saw its stock trade between a 52-week low of $3.87 and a high of $12.97.
Neogen operates in two primary segments: Food Safety and Animal Safety. While detailed segment results for the second quarter were not immediately available, the company's first-quarter report showed strong core growth in its Animal Safety division, driven by demand for biosecurity products and animal care solutions. The Food Safety segment, while larger, had faced headwinds partly related to the 3M business integration. Investors will be closely watching for commentary on whether the Food Safety segment's performance improved and drove the second-quarter upside.
With a market capitalization of approximately $1.61 billion, Neogen is a critical player in the global supply chain, providing diagnostic test kits and other solutions to ensure the safety of food and the health of livestock. The raised outlook suggests management is confident in underlying demand and its ability to execute on its post-merger strategy heading into the second half of its fiscal year.